The strongest investment in European stocks in over three years brought a rush of money into the euro zone in December, European Central Bank data released today showed.
This healthy appetite for euro zone stocks helps explain the euro's surge to a record high at $1.3667 at the close of 2004.
But analysts said the buying spree probably reflected not so much new-found confidence by investors in the economic strength of the 12-nation currency bloc, but rather their desire to limit exposure to a falling US dollar.
Foreign investors snapped up €28.9 billion worth of equity securities in the euro zone in December, the ECB said in its monthly balance of payments report.
At the same time, euro area residents sold €11.2 billion worth of foreign stocks, bringing net inflows into equity securities in December to €40 billion.
For all of 2004, net investment in euro zone equities totalled €61.9 billion, up 24 per cent from the prior year.